


ee | | 
: BY €. F. ADAMS. 
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BOSTON: es 
mie Nee - PUBLISHED BY WILLIAM D. IORNOR, 
’ Corner of Weatington and shee Streets. 
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1837. 





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FURTHER REFLECTIONS. 


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Tue favor which the reflections printed in the month of 


February last met with among those few persons to whose » 


judgment they were submitted, has encouraged the author 
to venture a few more. The crisis in our currency then 
pointed out has happened, but its effects have not passed 
away and appear not likely very soon to pass away. And 
there are symptoms in the public feeling upon the subject 
of so very ambiguous, I might say, of such a two-fold 
character, as very reasonably to keep up the anxiety which 
the original event awakened. Perhaps it may be the mere 
whispering of vanity which prompts me to add anything 
to the very able discussions carried on during the late ses- 
sion of Congress; of this, my readers will be the best 
judges. But of one thing, I feel confident, that I will con- 
tribute the proper disposition —a disposition not to court 
the benefit of party support from any side whatsoever, 
nor to irritate the feelings of one human individual un- 
necessarily to the full expression of what I hold to be the 
truth. Perhaps there is no subject of such deep and abid- 
ing interest to the prosperity of a nation, upon which it is 
equally important. to avoid prepossessions or prejudices; 
none where the indulgence of the passions works so much 
injury to the judgment. One obstacle to the success 
of Political Economy as a science and consequent at- 
tention by practical men to its injunctions, is found in 
the difficulty of attaining a position elevated enough to 
look over the whole surface of action. Hence a danger of 
mistaking the relative importance of events, of giving to 
an exception the character of arule, and of making a par- 
tial view weigh as much as if it was a general one. It 
can only be by a slow philosophical process of induction, 
requiring patience, moderation, and the application of many: 


4 


minds, thinking facts over in the way peculiar to each, 
that general rules may be gradually established for safe fu- 
ture guidance. Hach contribution, however small in it- 
self, may thus go in the end to form something which by 
its solidity shall prove of permanent benefit to the com- 
munity at large. 

On the fourth of March last, the late President in his 
valedictory address congratulated the public upon the as- 
tonishing prosperity of the country; and so far as the pres- 
ent writer had an opportunity to observe, none, even of 
his most bitter opponents pretended then to contradict him. 
Yet as if to show in figures of light the fallacy of his 
judgment, on that very day the bubble, which he took for 
prosperity, broke. On that day happened at New-Orleans 
the first great commercial bankruptcy, the precursor of the 
general suspension of specie payments which took place in 
May. ‘The operations of our banking system had reached 
their condition of the utmost tension, and the cords then 
began to snap. ‘The inducing cause was the re-call of 
capital borrowed from Europe. It may be recollected in 
my former reflections that the extraordinary advance in 
prices which gave such a spring to speculating enterprise 
for a year or two was attempted tobe traced to the en- 
largement of the metallic basis in the country by unnat- 
ural means. We were not only borrowing largely of 
banks already existing, but were borrowing from Europe 
the specie to make new banks from which we were again 
to borrow. ‘Thus a stupendous edifice of paper credit was 
erecting which the merest breath of a doubt on the other 
side of the Atlantic, acting as a recall of money lent, had 
the effect of demolishing. 

In tracing the immediate suspension of specie payments 
to the recall of foreign credit, however, it is not my inten- 
tion to give to it so much of prominence as a general cause 
of our present condition as others have done. When the 
fictitious valuation of our great staples of production upon 
which so much reliance had been placed, as an offset to 
our debt abroad gave way, a sudden and unexpected requi- 
sition arose, not merely to pay debts about to be due, but 
to provide coin for some which had been supposed already 
paid. ‘I"he suddenness of the demand came like the last 


drop upon the full cup; but it must be recollected that 


that drop did little towards filling it. 'The cup was already 
full. The foreign demand might have been paid without 


f 


5 


much sacrifice if it had not come upon the immense debt 
already created at home through unbounded domestic spec- 
ulation. That was and is at the bottom of the wretched 
condition we are now in. ‘The debt now due to the banks 
for which the resources of the country are liable, falls 
little short of $500,000,000. 'T‘hisis perfectly well un- 
derstood to be but partially based upon property of truly 
negotiable value. ‘The rest is the offspring of the gigantic 
speculating enterprise of the last two years, acting upon a 
fictitious scale of prices —and the payment of the foreign 
creditors so far from facilitating a settlement of this, ap- 
pears to my judgment likely, by removing at least a por- 
tion of the only true basis for our expanded currency, in 
gold and silver, to accelerate the rapidity of the downfall 

The secret, if secret it may be called, of our pres 
trouble, is the ‘debt at home — aggravated by a smaller, but 
more pressing debt abroad. ‘his debt is due, at home 
principally though not entirely to the banks — which is not 
yet in any considerable part of it arranged; abroad, to the 
American houses and European manufacturers, — and this, 
as based on more of substantial value, is in process of 
partial Jiquidation. 

There are numbers of persons who will cavil at this ex- 
planation, for they have been in the habit of ascribing exclu- 
sively to the agency of President Jackson what may after all 
be quite as fairly charged to their own imprudence and short 
sight. he atmosphere of party scorches everything within 
its reach, and most naturally those who imagine they suf- 
fer by its influence. Perhaps I may be in grievous error ; 
but to me General Jackson appears highly responsible, not 
for the present state of things, inasmuch as in this trading 
country it is always more or less likely to happen, but for 
the defenceless condition into which the government of 
the Union, intrusted to him for very different ends, has 
been thrown byit. It was the voluntary withdrawal of 
the beneficial influence of the national power over the cur- 
rency which threw away all control over private and cor- 
porate cupidity, for which he must answer. He selected 
his own depositories of the public money under circum- 
stances of great personal responsibility to the country, and 
is to be charged not merely with their simple breach of 
trust in not returning that money, but with their failure in 
keeping the currency in as healthy a state as the institu- 
tion which preceded them in performing that duty had 





+ 


done. Further than this, I do not perceive any fault, 
The community might and probably would have over- 
traded at this period under any circumstances, but it might 
have done so without inflicting so paralyzing a blow upon 
the government or making it so hard to devise a resource. 

To an impartial eye, the defect of the late administra- 
tion must appear to have been over-confidence—and the 
department in which most injury has resulted from it, has 
been in the management of the public monies, where, it 
may not unreasonably be suspected, was the greatest ab- 
sence of materials for calm, practical judgment. Even the 
good principles upon which the President was disposed to 
rest (and I am free to confess I think he had some) lost 
much of their value in the mode of their application. A 
unity of system to give to those principles relative as well 
as positive consistency was utterly wanting. Single meas- 
ures were introduced calculated upon a plan very different 
from that upon which the government was generally act- 
ing, hence incongruous and ‘uunreasoifable i in their practical 
working; and novelties adopted without reflection upon 
the adequateness of the means relied upon for execution. 
Thus instead of remedying the evils of our currency they 
were aggravated — and a sort of spasmodic, irregular move- 
ment communicated the very opposite to healthy action. 
Now it was a turn of pain, then great relaxation, now a 
cramp and then a fever, now a fet bake and then com- 
plete prostration. 

Admitting this description to be true, the source of the 
evil at present afflicting us yet remains untouched. After 
every allowance that can be made for the violent interfer- 
ence of the President from the day the national bank was 
denounced, down to that of issuing the specie circular, the 
heart of the sore is not probed, the wndue extension of the 
banking system of the States, for which he can be held 
but very partially responsible. 

It is dificult now to touch this point without giving rise 
to misconception as well as inflicting pain. But the pre- 
sent writer is not aware of any object to be gained or lost 
by himself in any quarter which should prevent him at 
the present crisis from speaking the truth. He is not one 
of those who in their over-earnest pursuit of a good prin- 
ciple, forget the injury that may grow out of its adoption. 
Nor does he imagine it necessary in discussing the mode of 
correcting the evils of a system, to direct an exterminating 


‘he 


7 


hand against the system itself. He isa firm believer in 
the great advantages of the credit system as a practical 
and a thoroughly republican mode of advancing the for- 
tunes of honest and enterprising; but poor men, and through 
them, the public; but he sees also its disadvantages and 
the absolute necessity which exists, that the nation should 
hold in its hand a corrective. Otherwise, imprudent indi- 
viduals will always have it in their power, as they now 
have done, to involve and to distress the community. 

It is never too late to expose an error, even when cir- 
cumstances may prevent our immediately profiting by it: 
The banks now hold rights by their charters which it 
thay not be expedient to question; but the terms upon 
which they acquired them form a fair subject for consid- 
eration. ‘The impression seems to have been general that 
the profits of banking yield a legitimate subject for legis- 
lative distribution to benefit individuals or companies, as well 
as for taxation to procure revenue. ‘The condition of the 
currency is thus made a point of secondary importance to 
that of procuring means to support the expenses of the 
State. What shape this revenue may assume, whether an 
annual tax upon the capital authorized as in Massachusetts, 
a contribution to a common safety-fund as in New-York, 
or a direct bonus as in Pennsylvania and some other States, 
is immaterial. It is respectfully submitted whether the 
principle of the grant is not wrong — first, because it is 
granting aright to make a profit out of the people by fur- 
nishing them a currency which cannot be limited to indi- 
viduals merely for their own advantage without infringing 
upon the sound principles of republicanism — secondly, be- 
cause it is setting that right up to sale. The practical 
difficulties which grow out Foe these errors may be briefly 
stated thus. Every association of individuals claiming to 
possess the requisite funds, who choose to apply for a char- 
ter to bank must have their application granted, or if re- 
fused, they are not possessed of the same privileges enjoyed 
by those of their fellow-citizens whose request has been ac- 
ceded to, and they have a right to complain. ‘The conse- 
quence is bad either way. On one side, popular uneasiness 
—- on the other, excessive banking. Bunt this objection does 
not compare in point of force with another. When the right 
of banking is set up to sale, every new proposition to make 
a bank presents in the tax an inducement to the Legisla- 
ture to grant it, which precludes the exercise of any sound 


8 


judgment upon the general nature and effect of the appli- 
cation. Yet admit for once that the privilege of making 
a currency for the public is a fair subject for bargain and 
sale, and that public is at once at the mercy of every 
set of adventurers who are able, by furnishing the neces- 
sary means, to demand a charter; nor can it have much 
right to complain if they make their contract, thus pur- 
chased, conduce to their private benefit by an indemnify- 
ing return for their outlay rather than to the general good. 
The State must remain content witha simply literal ful- 
fillment of the conditions it has thought fit to require. 
There may be some persons who will regard these posi- 
tions as radical, and tending rather to injure than do good. 
‘To them I can only say that IT have ho design to work up 
my opinions into political hobbies, nor to aid any particu- 
lar set of men not deserving the public confidence to gain 
it. But after the most careful and deliberate examination 
in my power to give to a subject, I can find no sound con- 
clusion other than this. ‘That the right to incorporate does 
exist in the Legislatures of the States, but that it is one of 
the most solemn trusts with which they are invested, and 
to be exercised not with a view to benefit some individuals 
in preference to others, nor to create among them a private 
interest adverse to that of the public, but with a sound 
discretion, on broad and generous public principles for the 
common advantage. In order to arrive at the proper exer- 
cise of this trust, it does not seem fitting either that money 
should be made the inducement to legislation, or that in- 
dividuals should regard it as the great consideration. he 
root of the evil is selfishness — a desire to save a paltry 
direct tax becomes the justification for acts which directly 
tend to unsettle the valuation of all property — a competi- 
tion in banking springs up to which a free rein is given 
by requiring only the payment of one per cent. per annum 
upon the capital stated to be employed,and the consequence 
soon follows that the natural and legal profits not proving 
suflicient to indemnify the undertakers, they are driven to 
extraordinary and, in the spirit though not perhaps in the 
letter of the law, evasive modes of compensating them- 
selves. ‘the money payment is regarded as the great re- 
Jation with the government. A relation of a debtor to- 
wards a stern creditor, against whom it is perfectly fair to 
gain every advantage that does not carry with it legal delin- 
quency nor an absolute forfeiture of the public esteem. 


9 


The present suggestions are, however, thrown out rather 
with a view to consideration for application at a future and 
distant period than with any idea of present use. I will 
pass them over and proceed to the notice of an error which 
has crept into the mode of conducting the business of bank- 
ing, which may be said to be the main cause of our diffi- 
culties. The experience of all later times has contributed 
to prove that banking cannot be conducted with safety un- 
less its loans are confined within very narrow limits. It can 
lend to a merchant neither the whole capital upon which he 
trades, nor even any considerable part of that capital; nor 
to any undertaker, either the capital which he may wish to 
put into fixtures, nor the circulating capital with which he 
carries on his business ; still less canit advance anything up- 
on purchases of land, or houses, or stocks which have no fixed 
and steady negotiable value. ‘The limit to which a bank 
can safely go is to lend to traders an amount corresponding 
to the capital which they would otherwise be obliged to 
keep by them unemployed and in ready money for an- 
swering occasional demands. 

These are the limits specified both by Smith and Say, 
two of the clearest of all the writers upon this subject, as 
well as by the natural course of reason. For the engage-~ 
ments of a bank to the community being all or nearly all 
of a kind for which it is always and immediately respon- 
sible, it follows that its resources never should be entirely 
out of reach. ‘The probability that its creditors will not all 
call at once, may enable it to keep out a considerable sum be- 
yond its capital lent in such a manner that the daily return of 
a part may equal the daily demand upon itself; but to prevent 
risk, the payments should be real on both sides. Any step 
which ties up the resources of a bank so as to make them un- 
available to itself in fact, however it may otherwise appear, 
is a step towards a failure to redeem the promises it has 
issued to the public. If one of these institutions advances 
to a trader any portion of the capital upon which he un- 
dertakes distant commercial adventures, it disables itself 
from drawing any support from just so much of its means 
until those adventures shall be terminated. If it goes far- 
ther and advances any sums for the purpose of domestic 
speculation in land, houses, or manufactures, it does. still 
worse, because it relies for repayment upon a far less defi- 
r te probability of realization, depending certainly upon 
time and probably upon a variety of circumstances over 

2 


10 


which it can exert no useful control. This will not do to 
redeem engagements subject to no such contingencies. 

It may be deemed a little extraordinary that I should 
undertake to state such principles as these at this day 
when they have been so long established as incontestable. 
But without undertaking to specify any particular instance, 
it will be allowed to me to express my belief that three- 
quarters at least of the six or seven hundred banks in the 
United States have violated them. It cannot be imagined 
that the legitimate business of banking in scarcely any 
State is sufficient to sustain more than one-half of the insti- 
tutions authorized by it, and yet if itis not, the inference 
is inevitable that resort has been had in lieu of it to those 
modes of loan already described, which must in no long 
period bring on bankruptcy with those who use them, and, 
as in the present case, involve in the catastrophe even such 
as do not. I would respectfully inquire of those best versed 
in the system of banks, whether a very large amount of 
the notes held by them are not of a character terminating 
in appearance only at fixed periods, but in reality perma- 
nent. In other words, can they rely upon a bona-fide 
payment of the notes due them as they come round? 
Do they renew them without any consciousness that a re- 
fusal to do so would hazard the debt? No matter how the 
thing may be worded, this is the heart of the matter, and 
whatever may be the qualifications to be made in regard 
to such debts, wherever they exist,a bank which issues 
upon them many promises on demand to the people, can 
never be perfectly safe. The only source to which it can 
look for legitimate means of redemption of its own en- 
gagements being most likely to be dried up at the very 
same moment when it ought to become most abundant. 

Is it unfair to assume that the inability to obtain pay- 
ment from debtors, in consequence of a very general habit 
of permanent credits in the shape of renewable notes was 
the reason why the banks suspended specie payments? I 
for one have always considered it so, and have for that rea- 
son been more disposed to assent to the final expediency of 
that proceeding. But the admission of the fact implies a 
great error originally committed somewhere. Perhaps the 
great feature of difference in the condition of Massachu- 
setts from that in which it was in 1814, may be traced to 
it. For the argument of mutual dependence that has been 
so freely used as justification of the suspension every where 


11 


out of New-York, can hardly stand good where there is ne 
at least implied admission of imprudent engagements and 
excessive liabilities. In August and September, 1814, all 
the banks of the Union, south and west of New-England, 
suspended ; and nevertheless, on the first of January follo w- 
ing, the banks of four States in New-England which did 
not suspend, held $8,200,000, or nearly if not quite half 
of the specie then supposed to be in the country. oe 
this look like a dangerous drain? 

It is very possible that there may have been some 
banks which having kept themselves within the line of 
safe business here marked out, could have continued to re- 
deem their own promises in specie in a full reliance upon 
the coming in of their resources. The reason why they 
did not, is stated to have been a principle of mutual sup- 
port and co- operation which has been adhered to as an in- 
variable rule of conduct for all. I must in this connexion 
be allowed to remark that the merit of this reason is not 
precisely apparent, nor can I understand its safety either to 
those institutions adopting it or to the community. Per- 
haps to its establishment may be owing the defenceless po- 
sition into which all the banks have fallen. 'The first ef- 
fect is to put the course of those skillfully and prudently 
conducted entirely at the mercy of those differently man- 
aged — the second, to hold out to the public a false and 
deceptive notion of the equal soundness of good and bad. 
If the debtors of a bank pay it not in specie nor in their 
own bills, but in those of another bank in the same or a dif- 
ferent town, this does not strengthen that bank; it merely 
transfers a debt from one set of people to another. So if 
the creditors of the same bank are paid at its counter, not 
with specie or with its own notes, but with the notes of 
some other bank, they receive nothing but the evidence of 
anew debt. The first manifestation of the bad state of 
things in Boston in this respect, took place long before the 
formal suspension of specie payments. Large creditors of 
the banks, yes, I must add, of those which profess to be 
the most solid and respectable, when they presented checks 
to be paid in coin, instead of being met with that prompt- 
ness which should distinguish safely conducted institu- 
tions, were paid in part and put off for the rest with checks 
upon balances due from other banks in the street. ‘Thus 
a good-natured gentlemen who wished for eight or ten 
thousand dollars which he ought to have had at a mo- 
ment’s notice, has spent half a morning in running about 


12 


from one place to another to get balances due by one 
and another institution which ought to have been settled 
between themselves. In a place where twenty or thirty 
distinct institutions professing to pay specie exist, a case 
could be supposed by which a creditor might be kept 
going a whole day and get nothing, always supposing he 
was amiable enough to consent to it. Yetthere isno truth 
more clear in money matters that a delay of payment is 
prima facie evidence either of unwillingness or inability, 
and sometimes of both. Neither should ever be charge- 
able in the slightest degree againsta bank. The first ele- 
ment of banking being credit resulting from the public 
confidence, it cannot go on where room is given by hesi- 
tation for doubt. Therefore the measures of reform which 
will be. loudly called for whenever a resumption of specie 
payments is attempted, in order to place the banks, not 
where they did stand last year, but where they ought to 
stand always, are short credits and a rigid exaction of bal- 
ances among themselves, not by paper payment but in gold 
and silver. 

With regard to the particular measure of suspending 
specie payment, it is not my disposition to make it the 
ground of severe censure. Although it does pre-suppose a 
most imprudent and excessive expansion which, in the re- 
flections published prior to the event, I sufficiently ex- 
plained and foretold the consequence of, yet this once over- 
looked, it was justified by its urgent necessity. It would 
have done the public no good if the banks had persisted 
in pressing their debtors to a universal confession of bank- 
ruptcy, and it must have done them harm by the discredit 
which would have fallen in consequence upon the mass of 
notes in circulation, the goodness of which is commonly 
considered to depend in a great degree upon the solvency 
of those debtors. Yet after all, the merit or demerit of 
the measure will in the judgment of the world depend 
far more upon the series of steps taken since, than upon 
the abstract question of nght. If it shall appear that the 
imprudence which in the first instance led to the great 
loans and over-issues, has been and is continued, or that 
measures of restriction are not taken as rapidly as the na- 
ture of the case admits, in order to return to a sound and 
healthy condition, then will the public opinion settle down 
in the belief that individual and not general considerations 
impelled the banks, and the consequence will ultimately 
be a general withdrawal of confidence. It is here that 


. 13 


those institutions really sound and honestly conducted have 
an opportunity to show themselves decidedly supporting 
the right. Upon them devolves the heavy responsibility 
of warning the community of their danger in time, as 
well as the corresponding blame, if any weakness of nerve 
or timid spirit of association shall lead them into even in- 
directly countenancing wrong. Practically, the currency. 
has been long irredeemable in specie. ‘This is owing to 
an unhealthy, dropsical state of the banking system. Now 
is the time to cure it — of by blind denunciation in the 
radical spirit of the day, nor by flashy general invective, 
but by pointing out to those who will regard their reputa- 
tion as worth cherishing a plain path of duty, which is, to 
work back as soon as possible to the true principles of 
banking — shortened credits and a rigid settlement of bal- 
ances in coin. . 

But the great question is how to do so? Silver and gold 
have ceased to be held by the banks as coin and will not 
become so until they return to the fulfillment of their duty. 
When will this be? 

In the reflections formerly submitted, it may be recol- 
lected by those who read them that I concluded by ex- 
pressing the conviction that no effectual remedy could be 
found for the fluctuations we are now enduring until 
some leading statesman should be willing to attach his 
name and fortunes to an attempt to recover for the people 
of the United States represented in the national govern- 
ment the right distinctly asserted in the Constitution, but ac- 
cidentally lost in practice, of regulating the value of money. 
That the suspension of specie payments by the State 
banks has had such extensively bad effects upon the re- 
sources of the people in the national treasury, as well as 
out of it, is fairly chargeable to the loss of that right. 
Surely a large majority of us need not now any reasoning 
to be convinced that the right of selecting local institutions 
as depositories for the public money is quite as susceptible 
of abuse for party purposes by the administration, if so 
minded, as any power that is conferred —and moreover, 
that a choice of these, which are neither responsible to 
each other nor to the national power for their acts, cannot 
and do not furnish the necessary means which the people 
viewed as one community ought to possess as well to de- 
fend the whole from imposition as to protect the parts from 
the consequences of theirimprudent acts. The nation is sup- 


14 


posed collectively to possess that sort of reactive vigor 
which may remedy a general evil, when it has got beyond 
the power of cure residing in the States. But at this mo- 
ment it is bankrupt immediately upon the bankruptcy of 
those institutions with which its funds are deposited : and 
inasmuch as these neither derive their existence nor con- 
tinuance from its gift, it has no rights of correction, coer- 
cion or punishment which it does not share alike with the 
most powerless creditor in the community. 

Now is this the true end of republican government ? 
Mr. Jefferson appears, it is true, to have supposed that inas- 
much as government was made to oppress and disturb man- 
kind, the less there was of it the better. Perhaps the as- 
sumed hypothesis might be admitted if retained within 
those limits to which Mr. Jefferson was in the habit of 
looking for his historical illustrations. In the sovereignties 
of the old world, there are many elements which may be 
considered as adverse to the best interests of the great mass 
of the people, and promotive of selfish and individual ob- 
jects at their expense. But here in the United States, 
where the people rule undisputed, what object is more im- 
portant to them than the control of the currency —in other 
words, the right of preventing the depreciation of money 
or its undue fluctuations in value? ‘The poorest individual 
in the land, who gets perhaps only his dollar now and 
then, has as deep an interest in preventing that dollar from 
losing a part or. the whole of its power to feed and clothe 
him, as the man who owns his millions. Now to main- 
tain that there is no corrective for this evil, or only 
a corrective which must sooner or later be admitted by all 
to be entirely inadequate, has always appeared to me an 
insult to our good-sense as a people. Government with us 
is the people acting through representatives for its own 
benefit. Our compact is the surrender by individuals of 
a part of their natural rights in order to vest them in the 
mass for the common protection and the common benefit. 
We found ourselves weak when merely confederated States, 
because we had no national funds to pay such debts as we 
were obliged to contract for the common benefit ; and this 
was one cause why we made a Constitution by which we 
made sure of them. Nobody now denies that money is 
raised, nor that people are employed to raise it. How 
then can it be maintained that the same power which raises 
the money through agents of its own appointment, cannot, 


15 


after it is raised, make a good place in which to keep it? 
Must it depend upon agents selected by others, over whom 
it has little authority and no control? I cannot so read 
the rights of the people. The danger of confiding too 
much to men upon whom the power of governing is for a 
time conferred, | can perfectly understand; but this enjoins 
rather the necessity of discriminating between the honesty 
and dishonesty of individuals, than that of withdrawing 
the ability of protecting themselves. If the people derive 
no benefit from a constitution of government, why did 
they deliberately make one? why carry it on at so great 
an expense? why not revert to a savage state and rely 
upon Lynch law for redress of every injury? If, on the 
other hand, the government was framed to do good, and if 
the citizens have flourished under it beyond all former ex- 
amples, why is it at this late hour to be crippled of its abil- 
ity to do good in a vital part?) Why deny to ourselves an 
advantage which we ought to enjoy? 

The people who made the Constitution did not make an 
absurdity. 

Whatever may be thought of this argument under differ- 
ent circumstances, I am aware that its force will be resisted 
on account of the direction it manifestly takes. The system 
of banking in the States has grown up, and the national 
government suffered the period to pass when it might have 
checked its progress. The States were prohibited from 
making paper money; but they got round the restriction 
by doing that through deputies they could not do in their 
own persons. No matter who was to blame; the mis- 
chief —if mischief it is—is done; and no reformer of 
this day will have much success in a plan of entire eradi- 
cation. ‘The States make banks which the nation cannot 
directly control. Shall the money of the nation be in- 
trusted to them? Certainly not; because experience has 
twice shewn they cannot keep it safe. But the people as 
one nation can orgauize a system which it can control ; and 
by engrafting upon it a bank, that system can control the 
State banks. Shall this be done? ‘That is the question. 
As one member of the cornmunity I say yes; because it is 
the only legitimate way of getting back the right of regu- 
lating the currency which does belong and ought to belong 
to the people, and by them should be intrusted to their rep- 
resentatives to use for their advantage. 

I admit that it is possible to organize a system of col- 


16 


lecting the revenue which may keep the national funds 
tolerably safe without exercising much centrol over the 
currency, and this appears to be the idea formed by the 
present administration as well as the party which sustains 
it. It may be advisable for persons in power to soothe the 
ears of the people made most unwarrantably jealous of the 
name of a national bank, and to call this a separation of 
bank and State. It certainly will not be ill for the people 
to give it in its present form without the deliberate sanction 
of legislation by their representatives, an opportunity to 
be tried by experience. We may find that, after all, it 
makes only two kinds of currency, one of which the na- 
tional government receives, and the other we receive. We 
may find that after all we have only got a national bank 
in another shape, of which the officers of our government 
selected by us for very different purposes are the managers, 
capable of doing us a good deal of harm, and but very little 
good. If a majority of us are frightened at the sound of 
a national bank, let us call this something else, and let us 
try whatever is deemed the best. Nothing can be done in 
our country well that is not sanctioned by the people. — 
The collection of revenue in specie is attended with diffi- 
culties so manifest, that the inevitable tendency of things 
will be to asubstitution of a system of bills and drafts, the 
negotiation of which will as I said before, make a banking 
system. But how good or how bad aone cannot be shown, 
for the reason that the experiment has not been fully tried. 
The deposite bank system was much relied upon before it 
received its practical test. Itis now abandoned by the per- 
sons who adopted it. If it is the willof the majority, let 
this new plan be tested too. Should it succeed, I have 
not party feeling enough of any sort to prevent my rejoi- 
cing that the people will be released from their present suf- 
fering. Should it on the contrary, as I incline to think it 
must, fail of the great object, the helping us out of our 
trouble, then we may be ready to make something better 
in the shape of an effective national bank which shall have 
a firmer foundation than can at present be hoped from the 
unsettled state of public opinion. 

It had been my intention to avail myself of the right be- 
longing to every citizen of examining in detail the objec- 
tions to the sub-treasury plan. But I abstain for two rea- 
sons —the first, that the principal points have been very 
ably discussed in the speeches made at the late session of 


1v 


Congress — the other, because the expression of popular 
opinion since has been of a kind to render its adoption ex- 
tremely improbable. Whatever might have been the ad- 
vantages of that system, it does not, appear to be proved 
that either in cheapness, in efficiency or in strict compli- 
ance with the spirit of our system of government, does it 
come up to the old plan of a national bank. In that there 
were two principles which I hold of inestimable value. 
The first that the interest of the people should be engrafted 
upon the interest of individuals instead of relying simply 
upon their sense of duty — the second, that the power of 
those men intrusted for the time with the management of 
the executive government should be balanced by the influ- 
ence of men not under its dictation. ‘The former principle 
was thought, and if we judge by experience justly thought, 
to insure the good management of the people’s money — 
the latter to prevent the danger of misuse of the execu- 
tive power in the distribution of treasury favors. Now, I 
would ask, where is the compensation in the new plan for 
the loss of these fine features? What guarantee have we 
in the character of individual office-holders holding their 
power at the sole pleasure of the Executive, of the safety 
of the public money? What is their salary in comparison 
with the use of it. And even admitting that a sense of 
moral obligation would prove superior to the interest lying 
so strongly the other way, where is the security from an 
overruling party discrimination of banking favors, thus 
framing an electioneering system of the worst and most 
disgraceful kind? 

The September message of President Van Buren ap- 
pears to me at least, to notice these objections without an- 
swering them, and to rest upon the possibility that the 
danger from them is exaggerated rather than upon a confi- 
dence that it is without foundation. Perhaps its most re- 
markable passage is the parallel drawn between the state 
of the United States and that of Great Britain. When 
the difference is set forth, it is singular that the causes 
should not be also. ‘The pecuniary affairs of that nation 
have not been deranged by the suspension of banks and 
bankers, because the government has not frittered away its 
control over the currency by a series of experimental ex- 
pedients to avoid being intrusted with the performance of 
cne of its legitimate duties; whereas in America we have 
put ourselves precisely in the predicament which England 

3 


‘KES 


18 


avoided. he consequence has been that in the one country 
the bank brought the imprudent and over-speculating por- 
tion of the community to their senses before they could 
inflict a deadly wound upon the national character ; while 
in these United States, no imprudent speculator among 
us was placed in a more helpless and ridiculous position 
by his extravagance than the general government itself 
was by the suspension of local banks. And to this day, 
and probably for years to come, we shall be debating sol- 
emnly whether the people have the power to help them- 
selves. 

It appears to me to be the great error of the administra- 
tion that it starts with the negative of the proposition. 
The interest of the whole people of this Union in a mass 
as Well as individually is to have a sound and good cur- 
rency. ‘T'o insure this, uniform legislation is indispensable ; 
and yet uniform legislation can never be expected from 
twenty-six States divided by local interests and influenced 
by selfish considerations. ‘To say then, as President Van 
Buren says, that the government of the nation can do no 
more than collect its revenue in specie, and that all other 


‘regulation of the currency must be left to the States, is 


equivalent to no more nor less than this, that the people 
never can have again a uniform currency. This abstrac- 
tion of government created only to benefit the people, from 
the interests of the people, is a novelty in republican history. 
If the President can see with composure every man in the 
nation submitting to suffer this evil, which he maintains to 
be irremediable, and lifts up his eyes to Heaven and prays 
that they may get out of it through ways which neither 
can nor will get them out, and notwithstanding this, he 
feels himself bound hand and foot from aiding them —all 
this only shows that the President has very quiet nerves, 
but it will never convince the sufferers that he judges 
right. But when he goes a step further and puts in use 
the power with which he was intrusted for very different 
purposes, merely to secure to the agents of the people’s 
will those advantages of a good currency which the people 
themselves ought to enjoy, he not only insults their under- 
standing, but taxes their patience. The argument, if ar- 
gument it be called, that ‘to provide by law that the gov- 
ernment will only receive its duties in gold and silver is 
not to confer on it any peculiar privilege; but merely to 
place it on an equality with the citizen by reserving to it 


¥9 


a right reserved to him by the Constitution,” is specious 
only. To be sure no peculiar privilege is conferred 
by such a law; but the peculiar privilege which makes 
the government able to enforce the law by demanding 
payment in legal currency through the medium of a 
legal officer is the privilege of powrr. And this the citi- 
zen does not enjoy to any similar extent. Supposing every 
man at this moment to resort to his right and to demand 
payment of debts due him in the legal currency concur- 
rently with the government, what would be the practical 
result? The government to be sure might come in by 
virtue of its authority in the land, and because it has offi- 
cers in pay to sue forfeited bonds, as well as to sell forthwith 
the goods which it keeps as security, for the most they will 
fetch, and thus it would be satisfied; but what becomes 
of the citizen with his equal right who has no goods under 
lock and key, and no resource but an expensive suit at 
law? What is the law to a debtor who has not the coin, 
and by the very act of government in monopolizing it, 
cannot get it? What is the privilege of a citizen to de- 
mand payment in the legal currency, when it is clear that 
he cannot use it without hazarding more than he can gain 
by it? It is a sense of common interest which renders the 
people at this time willing to sacrifice their privilege until 
the moment arrives when it can again be exercised with 
safety. But it seems this sense of common interest is not 
shared by the government, the creature of the people. 
No, the maxim is solemnly put forth by the chief magis- 
trate —every one for himself —the government will take 
care of its own concerns; it will by means of its power 
take the first sweep at all the gold and silver, and after 
that the people may do the same for what is left, if they 
can —and if they cannot, why it is bad; but it cannot be 
helped. So that, as in the fable, by taking the lion’s 
share of the prey, it leaves the miserable remnant to be 
gnawed by the rest of the animals to save them from 
the horrors of starvation. Is not this the point of the story ? 
But government was not constituted to destroy but to pro- 
tect men -— it was not ordained among us to create an in- 
terest adverse to that of the people — it was not established 
to pay executive agents in coin and all other debts in 
money of less value. The people have too much judg- 
ment to commit such gross inconsistencies against common- 
sense as the affirmative of those propositions would imply. 


20 


It is not intended however to sustain the expediency of 
acknowledging an irredeemable paper currency by any ar- 
gument here advanced. The difficulty with the President’s 
system is, that he forces that currency upon the community 
in order to save himself. He acknowledges no community 
of interest: rather than this, far better would it be that 
the government. should take any paper which satisfies the 
people. What is the government but its creature? And 
what is the President doing but mocking us, when he 
throws us back in a matter of vital interest upon rights 
the concession of a part of which made the very office he 
fills, a far less important feature of the general system than 
the one he is sacrificing. The thing that is called for is 
a practical cure for a disordered currency which shall do 
the least mischief and the most good. It must be a cure 
and no quackery. ‘The Constitution was the result of a 
sense of the evils of the disease, and was designed to rem- 
edy that among others which had previously afflicted the 
body politic. ‘To propose a treasury system with implied 
banking powers which is not adequate to the only purpose 
which can benefit the community, the furnishing a cur- 
rency of tolerably uniform value is applying to the people 
only the torment of Tantalus: 


a labris sitiens fugientia captat 
Flumina. Quid rides? mutato nomine, de te 
Fabula narratur. 


It has been already remarked that the present writer in 
his former reflections ventured to express the opinion that 
no return to.a better state of things could be expected 
until some leading statesman should be willing to attach 
his name and fortunes to an attempt to recover for the 
people of the Union the control over the currency which 
they have lost. That this control can now be regained 
only through the medium of a banking institution deriving 
its authority from the national power, is a position to which 
the majority may not yet be entirely prepared to give a cor- 
dial assent, but which will force its own progress to convic- 
tion. 'T'o such an extent has the miserable cry of selfish ob- 
jects to be gained prevailed, that it is perhaps unadvisable for 
individuals to press the point further than to state the reason- 
ing which has convinced their minds, and leave the result to 
the natural good-sense of the majority. This has been done 
ina very moderate and statesmanlike manner by Mr. Clay, 


21 


Mr. Sergeant, and by Mr. King of Georgia, and here it may 
safely rest. Successful as has been the battle waged with 
the prosperity of the country, it is not to be credited that 
the same event can attend the contest with its adversity. 
The people have as yet experienced hardly the commence- 
ment of a thoroughly diseased state of the currency, and 
have listened with patience to the monstrous absurdity 
that it was not democratic for them to help themselves. 
They may yet hit upon several quack remedies before they 
reach the only effective one. But they will reach it in 
the end — and then the statesman who shall have adhered 
consistently to his opinions through good report and through 
evil report, who shall have maintained without extravagance 
and yet with energy, the power of the nation to take care 
of the people’s interests, will meet with his reward in the 
superadded confidence of a reviving community. 

But the question recurs, what is in the meantime to be 
done? ‘The troubles are grievous and need a quick reme- 
dy. The President has deliberately thrown away all pow- 
er and even all active sympathy with the people. A large 
majority of the national Senate go with him, the House of 
Representatives is so divided in sentiment as to render 
useful action impracticable ; and it may well be doubted 
whether a majority of the voters have yet arrived at any 
settled conviction of the best mode of remedy. Under 
these circumstances there must be delay, let the suffering 
be what it may ; delay to afford us time to consider the 
matter well over; delay to give opportunity to test the 
projects of the administration. But during this delay it is 
not for the States whose citizens have been so rudely 
thrown back upon their limited local resources to stand 
idle, nor to waste time in unavailing regrets. If the na- 
tional government has led the way in the selfish system, 
it is for the various sections of the Union to follow the ex- 
ample so far as preservation from the greatest evils may re- 
quire. New-England, which very deservedly enjoys the 
reputation of applying herself with concentrated energy to 
the improvement of any contingency, New-England must 
stand or fall by her own exertions in regulating her cur- 
rency. She must now, as she did in 1814, save herself 
from the wretchedness of a depreciated and fluctuating 
paper money. I would that she were as happily situated as 
at that time to commence the effort; but she has drank 
too deeply of the intoxicating cup—the question is not 


22 


now of simply going on; it is the more difficult one of 
going back. The cry of despair is not infrequent among 
us because the task is so hard. 

The solemn topic for consideration is, whether a re- 
sumption of specie payments shall be attempted on the 
part of New-England even if she is forced to do it alone, 
or whether it will be advisable to go on as at present under 
the hope of a general coincidence in that measure from 
other quarters at some future moment. 

In entering upon this branch of the subject, it may be 
advisable to premise by stating again my entire indisposi- 
tion to wound the feelings of a single individual, and 
equally my indisposition to sacrifice what I believe to be, 
true to any idea of false delicacy towards men. ‘There 
has occasionally been manifested an inclination to sink the 
notice of matters which are of very serious importance to 
the community by an appeal, not to argument, but to the 
characters of individuals whose situations are supposed to 
involve them in the possibility of an implied censure. It 
is not too much to say that those gentlemen could not 
have a worse defence. They are to a certain extent pub- 
lic functionaries responsible to the laws, and they must hold 
up their heads and plead in direct terms guilty or not guilty, 
when put upon trial, without a word in bar to the jurisdic- 
tion. If they show themselves innocent, of course they 
will be honored as they always have been; if the reverse, 
their previous good character ought not to be allowed to 
shield them. It is not in my province to try them; but it 
is my right as a citizen respectfully to discuss acts for 
which they are responsible, without offence but without 
fear, and this right I propose to exercise. 

The resumption of specie payments may be considered 
in two lights — the first, the moral one —the second, the 
practical and expedient one. 

In regard to the first, I cannot suppose that much differ- 
ence of opinion will be entertained among well-informed 
persons. Every banking institution must decide for itself 
how far it is strictly right to take advantage of a contract 
without fulfilling the terms of it, or how far in other words 
it should issue promises it is not able, or if able it is unwil- 
ling to redeem. A bank is not morally responsible ; but it 
cannot be doubted that an individual under the same cir- 
cumstances would be held to rigid accountability. The 
people who are the holders of these promises stand toward 


23 


the banks in the light of a creditor giving to his debtor an 
extension of time within which to release himself from an 
obligation already incurred, and not to extend the sphere 
of those obligations. Now so long as it may be necessary 
to make advantageous arrangements for returning, the peo- 
ple ought to wait, but when they are told that they must 
wait even longer, that though the ability to meet all en- 
gagements undoubtedly exists in certain quarters, yet it is 
not considered advisable to do so until the same ability is 
manifested in other quarters where it is not likely soon to 
happen, it will not be thought unnatural that their faith 
should be shaken in the solidity of professions however hon- 
estly made at the time, and their suspicions aroused of the 
possibility of some serious catastrophe. Logic may refine 
away much, but it cannot destroy the plain maxim of com- 
mon-sense and downright honesty that where one man or 
body of men promise to pay, if they can pay, they ought 
to pay —they ought not to make their will to pay depend 
upon the course of others less able or less willing than 
themselves. | 

This is the moral view of the matter suggested for the 
consideration of the public, without insisting exclusively 
upon its result. In this world I am perfectly aware that it 
is not always practicable to attain the highest standard of 
moral excellence in active life, although I should never re- 
gard this as an excuse for failing to attempt it. Icome to 
the topic of expediency where I know I shall be met with 
this reasoning. ‘T‘he banks in any one place cannot re- 
sume unless sustained by some tolerably general concert ; 
for the attempt would be attended by the necessity of en- 
tirely stopping business. It would be impossible to issue 
a note which would not immediately return to drain them 
of their specie, to supply which a call would be necessary 
upon their debtors too severe for their ability. The con- 
sequence would only be a repetition of the hazard, to avoid 
which was the cause of the original step. The enterprise 
of acommunity cannot suffer a perfect stagnation. The 
decline of prices under the forced sales which would fol- 
low a stoppage of the usual bank accommodation would 
involve extensive ruin. How much better then to wait 
until the banks generally have put themselves in so favor- 
able a position, that the foreign debt being once paid off 
and thus stopping one outlet for specie, they may by united 


24 


efforts resume payment without heavy sacrifice to the 
public. ; 
My answer is — 


Rusticus expectat dum defluat amnis; at ille 
Labitur et labetur in omne volubilis aevum. 


If the people are to wait until the foreign debt is paid 
off while the banks continue to do the very act which most 
keeps that debt alive, they may as well bid adieu to friendly 
tones and assume the sterner ones of command. For the 
banks to abstain from action in expectation of a reduction 
of the price of exchange, is like putting a horse, not in the 
shafts, but behind a cart, and looking to see the whole thing 
move. If there was any point that I flatter myself upon 
having clearly proved in my former reflections, it was this : 
that the excess of bank paper issues during the two years 
prior to the suspension had been the cause of the enormous 
advance of prices which gave an apparent profit to every 
article of barter whether of foreign or domestic production. 
This scale of prices of last year has been only sustained 
until this time by the suspension of specie payments, and, 
inasmuch as it is in a great measure artificial, must sooner 
or later come down. If it is attempted to continue it by a 
paper currency, one moment beyond the confidence of the 
community in a return to specie payments continues, it 
will force its way into notice by a depreciation of that pa- 
per. The only wise course for the banks is to call in their 
circulation, to diminish the paper medium until no more 
remains with the public than is needed for the use of the or- 
dinary demand of business, and then foreign exchange will 
cease to call for that specie so much more needed at home, 
and the bank-note will again be more nearly worth what it 
was before this crisis commenced — its equivalent in gold or 
silver. ‘Then will be the time for them to fortify them- 
selves gradually with specie. 

I know very well the motives which have con- 
duced to the continuance of an excessive paper cir- 
culating medium —I know that the fall of prices will 
ruin many individuals whose only hope of solvency is 
in the fictitious valuation they continue to give to their 
property. But I would ask such persons whether the 
experience of the last six months does not prove that 
a scale of prices staggering under its own weight, sup- 
ported as it has been by the force of an artificial currency 


25 


is equivalent to a stagnation of business or no prices at 
all? The cord has already been stretched within an inch 
of what it will bear. If you force it more under the vain 
hope of realizing profit from a further advance in prices, it 
will snap, and involve the community as well as yourselves 
in ruin. And unless you can force it and realize that fur- 
ther advance, what is the prospect of your solvency worth ? 

While then I would not be understood as disregarding 
the objections to an immediate return to specie payments 
on the part of the banks of New-England, I would hold 
up to them in the strongest manner the absolute necessity 
of setting down in earnest to the work of preparation for it, 
graduating it as much as they please. ‘This has not been 
done in the manner which was expected. ‘There is griev- 
ous deficiency somewhere, the causes of which the public 
ought to know. Look for example at the returns of. the 
Boston banks which regulate the currency of New-Eng- 
land. Where in them is to be found the evidence of a 
preparation to return to specie payments? It is now six 
months since the solemn declaration to the public that al- 
though then unable to redeem their promises to the people, 
they would proceed at once to put themselves in a condition 
to do so, and yet what is now their relative situation ? 

The following is believed to be a fair statement of the 
variation in the course of the banks since the 11th of 
May, the day previous to the suspension, when 

The capital returned was, of 33 banks, $20,700,000 





Upon which the loans were 02,108,924 
‘lhe circulation was 1,632,299 
Deposites 3,868,361 
Making due on demand | $5,400,660 


‘To meet which in specie there was the sum of $976,570, 
or one dollar to about 55 of debt. 

On the 29th of July it must be perceived that the num- 
ber of banks had diminished to 31, and the capital had 
fallen to $20,400,000 

But the loan of the 31 banks now exceeded that of the 

whole number in May, having risen to 38,777,307 

The circulation of the 31 banks also exceeded that of 








the 33 banks, in May, being 1,966,897 
‘The deposites had risen to 6,206, 166 
Making due on demand 8,173,063 


To meet which the specie had fallen to $946,552, or one 
dollar to 8% of debt. 
4 


26 


On the twenty-fifth of November, the capital remained the 
same— 20,400,000 


The loans had diminished from July to 39 460, 803 
The circulation had mounted 


up to +) 2,385;306 
The deposites 6,097,733 
$8,483,039 


to meet which the specie had risen to $1,080,073, or about 
one dollar to 77% of debt. 

It is much to be regretted that the information furnished 
is not more precise as to the balances which may be due 
to other banks not in the association, nor to how far the 
specie returned may be liable to the claims of country banks 
which are called upon to make a deposite in Boston as secu- 
rity for the redemption of their notes. Admitting how- 
ever for a moment that these considerations would make 
no material variation in the return, the fact yet remains 
palpably demonstrated that the circulation of thirty-one 
banks in November exceeded, by the sum of $753,007, that 
of thirty-three banks in May last, two of which had ‘been 
discredited in the interval, whose circulation if deducted 
would increase the amount of issue of the rest probably 
almost to $1,000,000. 

I am sensible that this mode of summing up the condi- 
tion of all the Boston banks, although the one by which 
they appear willing to abide, is not fair to many of them. 
The fact has been understood to be that several of the 
oldest and most prudently managed institutions have been 
calling in their notes until a very small amount remains in 
general circulation. ‘Fhis is praiseworthy so far as it goes 
— but it does not appear to reach quite far enough. The 
discounts continue, and the loans remain the same. Very 
reasonable objections may also be raised against the mode 
of discount adopted. If I understand rightly, the notes of 
such banks as continue to issue, which are received in the 
daily transactions of a bank that does not issue, instead of 
being accumulated to form a balance and returned for set- 
tlement, are regularly re-issued to the community, either to 
accommodate borrowers or pay depositors. ‘This operation 
in fact gives credit to and promotes the circulation of the 
notes of those banks which continue to extend their lia- 
bilities, when the primary object of the association as an- 
nounced to the public immediately after the suspension 
was to keep each within its proper limits. What is found 


27 


to be the consequence ? Notwithstanding the narrow lims 
its within which one class of banks has deemed it right to 
restrict its circulation, the returns show a regular and steady 
increase on the part of another class more than proportion- 
ate, so that not merely the vacuum occasioned by their 
withdrawal from competition has been filled, but an enor- 
mous addition has been made to the already redundant cir- 
culation of May. ‘Thus the banks which declared their 
inability to pay in specie In May notes amounting to $1,- 
632,299, are now after a deduction for a considerable 
amount positively discredited since, liable, with no great 
addition to their specie resources, to a sum in amount 
equal to $2,385, 306. 

Is this, | would respectfully ask, is this like preparing to 
resume specie payments? 

A great deal has been said in justification of this en- 
largement, about the increase of the average deposite, and 
the wide field for additional safe circulation opened by the 
demand for small bills in New-York. _ Perhaps there is no 
feature in our present condition more calculated to occasion 
anxiety and even alarm,’ than the facility with which rea- 
sons of the most doubtful soundness are received and cir- 
culated as unquestionable truth. It does not appear to 
have occurred to many persons, that the position of the 
banks towards the community is at all changed by the 
event of the 12th of May. Yet what greater change can 
happen to an individual merchant than a failure to redeem 
his note? For my part, I cannot recognize the right of 
any institution to look to further sources of profit out of 
the public, until it returns to the exact performance of 
those conditions which was required as the consideration 
for the grant of the right to make any profit at all. Nor 
can [ understand the propriety of enlarging, under any ex- 
-cuse of inducement whatever, liabilities which by being too 
large already brought on the catastrophe. Profit is not the 
right idea to associate with bankruptcy. When the banks 
in October last undertook to issue half a million of dollars 
worth of new promises in Boston in the shape of dividends 
to their stockholders, I confess it only required the evidence 
of evil intent to make it appear in my eyes a legal fraud. 
I am aware that the intent so far from being of this kind 
was really good, that the distress of numerous small pro- 
prietors whom privations in many other quarters made par- 
ticularly dependent upon their bank stock was the moving 
cause, and I respect the feeling which prompted it, even 


28 


a~vhen I feel compelled to regret that it prevailed. The 
true rule was justice to the creditor who can never be se- 
cure of his claim until the debtor is prepared to. meet it by 
full payment. Until that day comes then, the entire re- 
sources of the bank should be devoted to the fortifying it 
against every demand, instead of taking their course into 
the hands of the partners in the concern. Yet notwith- 
standing the palpable truth of this position, it is a little 
singular that not a hint has been given of it in any of the 
numerous discussions of the subject that have taken place. 
The Legislature of New-York by prohibiting at the outset 
the payment of such dividends has put the case upon a 
footing there which at least to my judgment seems worthy 
of imitation here and everywhere. 

So with regard to the increase of the deposites, the true 
reasoning would seem to be that instead of venturing to 
claim profits upon the use of them as in ordinary times 
and enlarging the extent of debt upon them, every exer- 
tion should be directed to facilitate the immediate dis- 
charge of that obligation. Here lies the weakest point of 
the banking system. It is believed that in Boston for 
many years past the returns will show the banks to have 
been at the mercy of a few heavy depositors who by acting 
together at any one time could, to say the least of it, have 
excessively embarrassed them. This ought to be remedied 
in future. Whenever it shall become the duty of the 
banks to resume specie payments, they will probably be 
called upon to supply the vacuum occasioned by the remo- 
val of the small change from daily circulation. ‘This ne- 
cessity will be supplied through the depositors, who will in 
consequence become somewhat burdensome in their drain. 
So far therefore from relying upon the great average 
amount of the present deposite as a basis of operations, it 
would seem to be the wiser policy to court by every means 
its diminution. Perhaps the increase of the deposites may 
be ascribed in part to the want of confidence of the public 
in the general note circulation. It is nothing more than a 
change of one species of debt in the shape of promissory 
notes payable on demand by various banks at different pla- 
ces, remote perhaps from the dwelling of the immediate 
holder, into another species of debt in the shape of a credit 
in account current with one bank situated almost at his 
door. Of course, in a time of uneasiness about money 
matters and credit, every individual who takes many notes 


29 


of the goodness of which he can know little, will be glad 
to convert them into a charge against a particular institu- 
tion with which he deals and in the soundness of which 
he feels particular confidence. But this will not go to 
show that after the present experience of all banks he 
might not take the first chance he could of getting a little 
specie to hoard. ‘To shield themselves against this danger 
many banks have compelled depositors to withdraw or to 
sign a written pledge that they will receive payment in 
notes of similar description to those which they may put in. 
How this may aid any particular bank, must depend alto- 
gether upon the extent to which it may have recalled its 
notes; but itis plain it can have no general good effect. Be- 
cause it leads only to a reconversion of the credit in account 
current into notes payable on demand, which must be 
forthcoming at the call and will be immediately presented 
where they belong for redemption. The bank which has 
most notes out will therefore suffer the most from the rule, 
and that which has fewest, the least; but the amount 
to be redeemed remains just the same. Perhaps the 
most objectionable point in the arrangement is, that the 
hazard of loss from any notes which may turn out irre- 
deemable is shifted from the shoulders of the banks upon 
those of their depositors. This is a hazard which a bank 
if it receives the notes at all ought to take, because it has 
a power of preventing undue and imprudent issues in its 
neighbors which private individuals have not. The very 
act of reception gives the notes a currency they might not 
otherwise obtain ; while the knowledge that any loss upon 
them will be largely shared by creditors of the bank, tends 
to relax its vigilance in guarding against it. Indeed it has 
been matter of surprise to me that depositors who have 
much to lose, should have universally consented to an 
agreement operating so unequally upon them. 

I come to the other reason assigned for the extended cir- 
culation, the demand for the small notes in New-York. I 
do not at present incline to admit the reasoning which sup- 
poses this likely either to be a very profitable or safe sort of 
circulation, provided always any intention is sincerely held 
of returning to specie payments. If the banks of New- 
York do resume or if they do not, the probability is that 
the law to prohibit their issue of small bills will be re- 
pealed. Should this be the case, of course they will take 
measures either to drive out foreign notes by receiving 


30 

them and forming heavy balances to be settled by our 
banks as they best can ; or, by not receiving them, to suffer 
them soon to fall into comparative discredit with their own 
which they would receive. Thus, at any given moment 
within the pleasure of another State, a large amount of 
paper may be thrown back upon a currency already redun- 
dant ; the immediate effect of which must be a downward 
step in the scale of depreciation, and another remove from 
the probability of a resumption of specie payments. 

The general inference to be drawn from the present con- 
dition of the association is, that they have failed in the 
main object for which it was formed —the regulation of 
the issues of each other. And having failed in this, there 
are objections to its continuance on other accounts, which 
render it an imperative duty on the part of the people ei- 
ther to require its dissolution or a different mode of com- 
municating its information. At present the banks conceal, 
so far from disclosing their individual condition to the public 
eye. It is due to the bill-holders as well as to the institu- 
tions which are understood to have restricted their business, 
that this should be distinctly exposed. I believe a tre- 
mendous responsibility rests upon the shoulders of the 
prudent banks. Let them not be deterred by fear of 
offence, the outcry of the interested, or by good-natured 
deference to timid counsels, from showing that the pub- 
lic confidence placed in them last May was well de- 
served. They are now arrayed in common cause against 
the people —they are covering under their mantle impru- 
dences which ought to be seen. ‘he circulation of the 
Boston banks has increased one-third since they declared 
themselves unable to redeem it. Where does that third 
come from? As itis now, the public is led to suppose 
that each of the thirty-one banks has contributed its 
portion, which is notoriously a mistake. But if ten of 
the banks have been drawing in, say for example, three 
hundred thousand dollars worth of bills, and yet the 
other twenty have been issuing not merely enough to make 
up this three hundred thousand dollars, but seven hundred 
aud fifty thousand more, it is high time that the people 
should know the names of the ten which have drawn in, as 
well as of the twenty which have been putting out, and 
should see their returns regularly separated from each other. 

But it has been said that the country banks have gen- 
erally reduced their business, so that, although the imme- 


ol 


diate amount of city bank paper has increased, the general 
condition of the circulation in New-England remains much 
the same — perhaps is somewhat reduced. I am inclined 
to think, from the very partial information in my power to 
procure, that the country banks have with a few exceptions 
been more faithful in the duty of preparing themselves for 
resumption than their neighbors in this city, and that they 
now hold balances against many of them. 'This has been 
in part owing to the pressure of the association upon them 
and in part to the necessity of supplying some additional 
guarantee beyond what their small capital and resources 
furnish to the public, for the redemption of their notes. But 
the tide has turned even with the country banks: and with 
the example of the city banks before them, some of them 
have relaxed in their praiseworthy efforts to strengthen 
themselves. They see that the only practical effect of the 
association is to narrow down their circulation and increase 
that of some members of its own body. Now to the 
public it is perfectly immaterial who issues the notes, so 
long as the average remains about the same as it was last 
year. The great point is to ascertain the quarter from 
which they come, for the purpose of keeping the commu- 
nity on its suard against imprudent issues. Publicity 1s 
essential both for the city and country banks; and it is rea- 
sonable to hope that, among the other regulations made 
necessary by the present contingency, the Legislature at 
its next session will adopt one to secure this. 

In the remarks which I have felt it to be my duty to 
make while writing upon the subject, it need hardly be re- 
peated that I intend no personal application to any particu- 
lar corporation whatsoever. It is because I am ignorant of 
the truth, that, with the evidence of the very inexplicit 
general returns of the association as the justification, I, as 
one of the people who hold the notes from day to day, re- 
spectfully ask that each bank should render its own ac- 
count, and thus supply us with information cf essential 
value to our property. ‘This can be no hardship if there is 
no wrong. Why has it not been done? Why are the 
poor laborers of the community—the most interested as 
they are likely to be last informed —to be left in the con- 
fidence that a note is good until it has become worthless ? 
Does not the association of banks continue to receive, and 
hence to hold up as absolutely sound, the paper of every 


32 


one of its members, until the very moment when absolute 
rottenness is proved? Take for example the Franklin 
bank as one case. It did not make itself unsound in one 
day. The process of bad banking is not so entirely cov- 
ered up as to be beyond the reach of many a shrewd guess 
in State street, months before a catastrophe. Yet it was 
but the interval of a single day between the time when 
the notes of the Franklin bank were received at the coun- 
ter of every other city bank on the same footing with its 
own, and the time when they were declared not receiva- 
ble —hence of not one cent value to them. Where then 
was the opportunity for a citizen to be upon his guard? 
Where was the return of the bank to show that it was is- 
suing notes and receiving none —that it was increasing 
its own debt and diminishing its resources? Why, it had 
been regularly published, but so merged in the generalities 
of the association, that it could no more have been discov- 
ered there than if it had been sunk at the bottom of the 
ocean. In the meantime, however, how many men may 
have lost ten, fifteen, twenty, perhaps fifty cents in the 
dollar of their week’s earnings, to be bought up by in- 
solvent debtors who have no other means of redeeming 
the evidences of gambling speculations but by spunging 
half of them out of the labor of an industrious com- 
munity ? . 

Professing as I do what I understand to be the conser- 
vative republican principles of the United States, equally 
removed from the two dangerous extremes of paper bank- 
ing and of metallic currency, it is in no spirit of hostility to 
any of the institutions now existing that I venture to sub- 
mit to the judgment of thinking men the following con- 
siderations. The hostility to property has thus far made 
little progress among us, and the wild onset of mad or mis- 
guided individuals upon the edifice of credit has happily 
met with entire defeat. But the battle has hitherto been 
fought upon the vantage-ground. How wili it be, if hon- 
est and honorable men expose themselves even to the sus- 
picion of winking at the breach of promises solemnly 
made, and in which the public put their confidence in ad- 
vance? How will it be, if individuals claiming to belong 
to the number of conservatives yield. so far to the outery 
of the timid and the interested as to hazard an approach 
to a great pecuniary convulsion unsettling all property, 
which an early resort to active measures might either have 


33 


prevented, or if not, might at least have discharged them 
from any responsibility for it? Let me not be understood 
as saying that this convulsion will certainly follow the pres- 
ent tendency of things, —I claim no spirit of prophecy ; 
but an irredeemable paper currency is a dreadful evil, to 
be likened in my mind to nothing so much as a ship afloat 
upon a stormy ocean without masts, rudder or compass. 
If she does not go upon the rocks and break to pieces, it 
is rather to be ascribed to the blessing of God than to any 
human agency in her favor. It cannot and ought not be 
concealed that strange and unwonted errors are becoming 
familiar to the minds of many among us, and that plain 
and homely truth which would never have been contested 
ten years since, now grates harshly on the ear. The sus- 
pension of specie payments, like the last cup which drowns 
the senses of the bacchanalian, brings on a state of leth- 
argy, from which no sounds can wake him until the natural 
moment for remorse, and perhaps despair. 

It has been of late the doctrine of some, that if the re- 
sumption of specie payments can only be brought back by 
a serious reduction of the loans made by the banks, far 
better would it be not to attempt it than to hazard the 
wide-spread ruin which must ensue to enterprising and in- 
dustrious men. This is the view of those persons who, by 
their position near to the individuals likely to be involved, 
have their sympathies strongly called out in their favor. 
For my part, I entertain no feelings but those of great 
kindness and good-will to all such persons, and no one can 
possibly more regret the very unfortunate position in which 
they are placed. But if they have their rights, so has also 
the great body of the people, and it is neither justice nor 
humanity to make the latter and greater number suffer the 
consequences of the imprudence of the former. The great 
truth that needs to be understood, is, that the currency of 
a country will not submit to regulation at the will of man. 
It’s laws are uniform and invariable. ‘The utmost possible 
enlargement of our’s while keeping it’s nominal value has 
already taken place. The prices of commodities have reg- 
ulated themselves by the enlarged scale, and the merchants 
who hold them at the maximum cannot save themselves 
from loss unless they should succeed in procuring another 
expansion and another rise in nominal value. But this 
cannot be done excepting at the cost of a depreciation 
of the paper medium which would be no more nor less 

5 


34 


than a tax of so many cents in the dollar according to it’s 
rate, upon the resources of every member of the commu- 
nity who is obliged to use that medium, merely to enable 
a comparatively small number to discharge, not the real, 
but the full nominal amount of their liabilities. This 
would be the immediate consequence without reference 
to other and more remote ones; and yet, rather than 
this should take place, I hardly think a doubt could be en- 
tertained that the merchants and undertakers should be re- 
quired to face the loss. 

From all these premises, it may be inferred that I hold 
the affirmative in regard to the expediency of active and tol- 
erably rapid preparation to return to the only sound basis 
for acurrency, paper instantly convertible intocoin. As yet 
nothing may be said to have been done. The loan re- 
mains the same, and the liabilities are increased far out of 
proportion to the increase of the specie. The time has 
now come to test the sincerity of the professions made in 
May, and to save us from permanent injury consequent 
upon the suspension. The foreign debt can present no 
bar which the action of the banks would not break down. 
It is reduced far below what it will be in amount if they 
continue to expand. No great argument is necessary to 
show that specie will go to Europe in quest of commodi- 
ties if it is more easily to be had than anything else—and 
on the other hand, that more commodities will continue to 
be imported if their nominal price here continues to adapt 
itself to the enlargement of our paper currency. ‘The true 
mode of operation would seem to be to equalize our prices 
more nearly by the level of other countries, and then we 
shall be under less temptation either to send them our 
specie or to bring back too many goods —to restore the 
natural relation between commodities and money which 
the imprudent expansion of the last two years (as I en- 
deavored to show in my former reflections) has so much 
disturbed. 

T'o effect this object, the loans of the banks must be 
curtailed, the circulation must be called in, the specie basis 
extended, and the depositors paid off or else put upon the 
usual and only proper footing. This process may and no 
doubt will affect prices —it will at first check trade — it 
may hazard debts now resting upon a doubtful basis —it 
will create distress. Every exertion should be made to 
ease the operation short of stopping its course. The blow 


35 


must come sooner or later, and it will be better probably 
for the sufferers themselves and certainly for the communi- 
ty that it should be sooner than later. Whenever con- 
tracts become adjusted to an irredeemable paper stand- 
ard, then the return to a standard convertible into specie 
necessarily acts as an unjust increase of the burden upon 
the debtors. Now is the time to prevent the happening of 
this. Almost all the contracts now existing are still con- 
tracts originally based upon a metallic foundation, and 
therefore it is only a hardship and not an injustice to re- 
quire their fulfillment. "The crisis must be met at some 
time or other. Why not meet it at once? ‘Trade will 
not revive on a sound footing by forcing paper any farther. 
Debts, the offspring of purely gambling speculation, cannot 
be paid any better by delay. Why attempt to put off the 
evil day if by doing so its horrors will only be aggravated. 
twenty fold? Every citizen of ordinary good-sense un- 
derstands that a great revolution in the value of most 
kinds of property has already taken place. ‘The machine 
of credit has broken down with its own weight. You 
must go back and look after capital. ‘The laws of cur- 
rency may be modified, but they can never be inverted. 
But the great argument will no doubt be that New-Eng- 
land cannot go alone without submitting to losses which 
may be avoided if due time is allowed to the banks in other 
parts of the country to prepare themselves for resumption, 
and thus a co-operation insured which would immensely 
facilitate the result. I should concede much to this posi- 
tion if I had not fears that very valuable time would be 
lost by the delay. ‘There is reason to believe that some 
banks in almost every State will never be ready to resume 
specie payments because the attempt to call in would be 
the signal for dissolution. At the same time it cannot, 
and ought not to be concealed that the directors of most 
of the banks are heavy debtors to them, and that they are 
called upon to do no less than to decide in favor of a meas- 
ure which certainly involves a call of payment from and 
perhaps ultimate bankruptcy to themselves. Now | have 
no intention to disparage a single gentleman of the six or 
seven thousand who act in this capacity in banks. I be- 
lieve them all to be as honest, as faithful, as conscientious 
as any equal number of men that could be found in this 
or any other society. Yet they are men possessed of all 
the varieties of temperament to which human nature is 


36 


liable —they are men whose evidence in a court of law 
under similar influences would go very near to be in- 
validated — they are men from whom it is unreasonable to 
expect impossibilities. Some will be timid — some will be 
frail-—some will be knavish. Now if there should be 
such, and they be anxious for a long and dangerous de- 
lay, is it for the honest and the honorable who have 
pledged their characters to the public for their sincerity, to 
be put back from the performance of their duty by the 
failure of those less able or honest than themselves ? 

No better illustration of the practical effect of waiting 
for this co-operation, to postpone action indefinitely, could 
be desired than the case of the late Bank Convention which 
has been sitting in New-York. ‘The result of its deliber- 
ation has been nothing but profession, very sincere, I 
doubt not, but still profession. Now this has been the 
public food already seven months, and it is very naturally 
somewhat anxious to vary it with a little performance. 
The attention of the people is very closely fixed upon the 
mode in which for the past the promises made have been 
kept; they are aware that the only period when a resump- 
tion will be at all practicable, a period immediately follow- 
ing the diminution of the foreign debt and previous to any 
hope of a revival of trade, must necessarily be short, and 
therefore instantly improved. Now if that period is im- 
pending as appears at this time probable, and yet the banks 
have by delay or inaction put themselves in a condition 
which renders them unable at once to make use of it, then 
will the responsibility for the whole series of unfortunate 
consequences that may result from it devolve, not upon 
the administration, nor upon the imprudent merchants and 
speculators, but upon the banks themselves. 

To expect that all parts of the country should be repre- 
sented, and to delay action upon that account, is liable to 
much the same class of objections already stated — very 
naturally, the banks least able to resume will be the slowest 
to attend any meeting where that measure is likely to be 
pressed. ‘T'wo or three States in the south and west have 
already authorized the suspension of their banks for two 
or three years for the sake of securing their debtors from 
the rapidity of payment absolutely essential to their resu- 
ming. Now to put the action of the ablest and best man- 
aged of our commercial communities down to the standard 


of those which are least, is synonymous with the inaction 
FS) 


37 


of the whole — when the true mode of proceeding would 
seem to be to force the deficient ones up to the standard of 
the best. 

But it is on the whole probable that if a resumption of 
specie payments should be decided upon, the condition of 
a considerable portion of the country must prevent its be- 
ing generally adopted. The commercial cities in which 
banking is still continued in a form the nearest approach 
to the safe rules heretofore laid down —the commercial 
cities must take the lead because they still have the great- 
est command of their resources. With them there are 
many institutions which have few or no debts resting upon 
fictitious securities, the offspring of the speculations of last 
year, and which can go on to action if they willit. But 
they must will it with more energy than they have yet 
done, especially in Boston. The system of reciprocating 
excuses must be broken up in city and country, and be- 
tween States. Each must look to itself; each must pre- 
pare to go on by itself}; and then perhaps they will all be 
ready much sooner than if they hang off in perpetual ex- 
pectation of the preparation of each other. 

And when I say that the duty of the sound banks is to 
retrace their steps and put the currency upon the sound 
footing on which it ought to stand, it is by no means to be 
inferred that the condition in which the banks were in 
May last when they suspended, or for eighteen months 
before, is the sound footing to which I would refer. Of 
late, the prevailing idea seems to have been that a bank 
was to be held solid so long as it did not break under any 
one demand made upon it, and not that it was to be pre- 
pared for any general coincidence of demand, that could, 
within a reasonable probability, be likely to happen. So 
much of error appears to have crept into the views of 
bankers in this regard, that it may be well to specify more 
distinctly the objections. On the first of May 1835, two 
years prior to the suspension, five Boston banks with a 
united capital of $2,500,000, held $37,421 in specie with 
which to meet $954,934 of immediate liabilities in the 
shape of notes on demand and deposites, being more than 
twenty five for one. These were among the weakest 
banks, it is true; but they were sustained by the stronger 
oues, or they would not have gone on a week. ‘lake, on 
the other hand, five banks of the highest character, with 
a capital of $4,400,000; their specie on the same day 


38 


amounted to $120,570, and their liabilities to $1,709,657, 
or more than fourteen for one. I would respectfully ask 
if this ought to be the condition of those banks whose 
character supports the currency against the imprudencies 
of their weaker brethren? 

The consequence of this state of things has been that 
the best banks have at times been obliged to resort to 
shifts which were neither creditable to themselves nor just 
to the community. Very few did not resort to the expe- 
dient of requesting heavy depositors not to draw checks 
which might form claims upon them for specie balances, 
but rather to present them at the counter themselves there 
to be paid in any notes which might happen to be on hand. 
Would it be going too far to say that for many months 
previous to the declared suspension, such a thing as a spe- 
cie check for any amount was procured with great diffi- 
culty and not without many trips to and fro among the 
various banks? Now I would request to know whether 
this is the kind of resumption of specie payments to which 
the banks look as the ultimate object of their ambition ; 
for if it is, no great spirit of prophecy will be necessary to 
announce that the present course of the government will, 
in discrediting their agency, very effectually decide their 
own tendency to discredit themselves. 

The restriction imposed by a national bank upon the 
undue extension of the local paper in the States having 
been removed, the immediate consequence was an apparent 
rise of prices and an impulse to the whole business of bar- 
ter, giving value to commodities in which the United 
States participated as largely as individuals. The process 
was entirely artificial, and therefore could not last. But 
when it stopped, the great amount of currency which had 
been kept in activity became useless, and was thrown 
upon its sources. ‘This has been well described under the 
metaphorical term of a collapse. ‘The paper could not be 
redeemed and a general suspension of specie payment fol- 
lowed. But the government, which had before been a 
very large customer for the paper, determined upon a 
change of course by which it would ultimately withdraw 
itself from its use. And this is likely to form a new era 
in the banking system of the States. The first effect is 
not merely to render superfluous a large amount of currency 
which it formerly required to pay all its various agents, 
which must therefore return upon the banks, but also to 


39 


set an example of distrust by which more or less of the 
same paper in the hands of private citizens may be likely 
to be similarly affected. The injury to them is conse- 
‘quently inevitable in more ways than one. ‘That the 
highest power of the state should proclaim that it has no 
confidence in the banks as safe depositories of its funds, is 
not perhaps so deadly a thrust as an attempt to grasp for 
its own separate use a large part of the limited amount of 
the precious metals, which is all the basis they can have 
to sustain themselves against the discrediting process pur- 
sued against their notes. Indeed these very notes must 
necessarily become the instruments by which the govern- 
ment will be supplied with the only medium it chooses to 
recognize, and the banks which issue them must always 
keep prepared for the drain thus likely to be entailed upon 
them. Hence it is with great justice that the treasury 
system is regarded as a measure of hostility towards them, 
notwithstanding the President’s denial in his last message 
that the inference is well founded. However good his in- 
tentions may be, and I am ‘not disposed to question them, 
his act implies ina manner that cannot be mistaken that 
they are not worthy of his confidence, and very dull would 
they be if misled in it’s tendency upon the community by 
any amount of profession to the contrary, however sincere. 

A contest now appears to impend between a pure metal- 
lic currency on the one hand, and a fluctuating inconverti- 
ble paper on the other, well calculated to render uneasy all 
the well-wishers to our country (and they form the greater 
number) who while about to be the heaviest sufferers are 
not involved in the action. It is somewhat curious to ob- 
serve how entirely the people have been lost sight of in 
the whole matter. For on the one side, the democratic 
administration of Mr. Van Buren is not ashamed to take 
care of itself while surrendering them up to the tender 
mercies of twenty-six State sovereignties utterly incapaci- 
tated by the nature of things from acting in concert for any 
purpose of legislation whatsoever, much less upon so deli- 
cate a matter as a uniform currency —and on the other, 
the fluctuating councils of seven hundred banks, whose 
first object is their debtor’s solvency, and whose general 
interest (apart from any considerations of moral duty) is 
unquestionably to entail upon the people an inconvertible 
paper, so long as they can be persuaded touseit. And we 
are gravely told there is no remedy under the Constitution 


; AO 


for all this. ‘To be sure it was thought by the framers of 
it that the case was otherwise, and for forty years we en- 
joyed the benefit of their opinion. But it has been found 
to be alla mistake. ‘T'he jealous vanity of State-rights is 
- perpetually appealed to for the sake of keeping the suffer- 
ers by this novel conclusion from complaining of pain or 
resorting to aremedy. The giant is to be tied with threads 
to the ground, and a parcel of pigmies are to run about 
and over him, shouting in his ear that bad as his situation 
is, he cannot and ought not to stir a finger to help himself. 

As one of the people of this Union, I thank God I was 
never taught in such a school of democracy. My under- 
standing of that word is, that it means the government of 
the people for their own benefit, and not the benefit either 
of the temporary agents of their will on the one hand, or 
the money corporations on the other. When these last 
take an origin from their own act, the creation should al- 
ways be traced to some general advantage they derive from 
it. ‘To say that a money corporation necessarily implies 
hostility to the public interest, appears to me to be taking 
high rank among the absurd theorists of the day. It may be- 
come so by injudicious management, I admit. Banks orig- 
inally were regarded in this country as public benefits. 
Their organization is entirely in accordance with the spirit of 
our institutions. The division of the stock into small sums 
enables persons with very small property to enjoy a share 
in profits which commonly belong only to the very largest ; 
and the distribution of the loans among the enterprising 
class who have not been favored by an inheritance of 
wealth, gives them a power to wield capital not often pos- 
sessed even by our wealthiest individuals. It is surely 
arguing rather too strongly against the capacity of the peo- 
ple for self-government to maintain that from the outset of 
our government they have not known what they were about, 
when, year after year and in every one of the States, their 
representatives have been creating banks on this associated 
plan. They still maintain the right to do so, and it is 
probably one of the last they would now be disposed to 
surrender. But the people in the separate States can do 
no more than to control those banks authorised by them as 
citizens of States, without insuring any uniformity of ac- 
tion. ‘There is no power to control them all, unless it re- 
sides in the people of the Union as a mass—and there, I 
for one do believe that it does reside. 


4 


* 
> 


At 


But it is often maintained that, however beneficial the 
original creation of banks may have been supposed to the 
people, their present situation is very far otherwise, and 
calls for entire reformation. My own views have been al- 
ready given on this subject in a preceding part of these re- 
flections. Yet, while admitting my belief that there are evils 
incident to the present state of the system, I am not so clear 
of the republican tendency of any useful change. Dis- 
credit the present plan of joint stock banking, or open it to 
that free competition which would very soon discredit all 
men operating upon fictitious or inadequate capital, and you 
may introduce a sounder system; but you will open the 
way for those colossal private banking-houses established 
upon immense wealth which have controlled for years the 
pecuniary operations of all the monarchs of Europe. Now, 
the question is plainly reduced to this: Which is most ac- 
cordant with our republican institutions, one National and 
many State banks created in shares, not for private benefit, 
but for the public advantage, subject to the control of the peo- 
ple through their representatives —or a few great bankers 
doing business entirely for their own account, irresponsible 
to the people, and yet at critical moments able very se- 
riously to embarrass their concerns? ‘The majority will 
answer this question as they like best; and in this matter 
they will have and ought to have their own way. But no 
reasoning yet applied to the subject can convince me that 
the democracy of Washington and that of Madison was 
not as deeply founded upon the interests of the people 
which they protected, as that of others who, in professing 
more care, do by their practice throw them entirely away. 
We can say, a national bank will not do; but in saying 
so, we deprive ourselves of one of the greatest blessings a 
people can enjoy — a SOUND GENERAL CURRENCY. 











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